Let’s Talk Recalls

Smart Business Decisions About Air Bags

BY KATIE STARK AND PAUL D’ADAMO

The “Let’s Talk” Series is designed to help auto recyclers understand defective Takata Airbag Recalls and make good business decisions. It was developed by Katie Stark and Paul D’Adamo, who represent the Rebuilders Auto Supply (RAS) Recall Team.

Best Practices: The 4X VIN Check

Are you selling air bags to customers? No worries but let’s be clear on one thing; it is illegal to sell parts that are recalled. The 4X VIN Check provides the necessary best practices to protect your business. Fines begin at $21,000 per violation and cap at $105 million. Recalled air bags have zero parts value so why not remove them and get paid to do it?

The 4X VIN check process:

Incoming Inventory Vehicles - Upon entering the VIN to create the motor vehicle record in your Yard Management System, run a VIN check. Why wait? Remove buyback air bags at this time.

Vehicles brought in for dismantling – VIN’s are added so run a VIN check prior to dismantling.

Point of Sale – prior to any air bag being sold (inventory or brokered), run a VIN check. Have your parts sales representatives print the sheet that shows zero recalls and attach to the customer invoice. One suggestion is to scan the invoice and the recall print out and save to your YMS for future reference.

Crush – prior to crushing, run a VIN check one last time and remove any buyback air bags.

A simple rule of construction is “measure twice, cut once.” It means that we should measure for accuracy before we commit time and resources. If we cut the wrong size board, it becomes un-usable, therefore its value is ZERO. Recalled parts have ZERO Value. Air bags that are part of the recall have a value ($55 for driver’s side and $60 passenger side - $115 for the pair). In auto recycling, measuring or assessing the value of time and labor is a good foundation to determine our return on investment.

We have been awestruck by business owners’ comments that it isn’t worth pulling air bags from inventory, even though recalled parts have a value of ZERO as inventory but have value as a buyback. We decided to make a business case for the quick and efficient removal of air bags using the measure twice, cut once axiom.

Liability – Not in my House! What is the chance of that air bag being sold to a customer? What is the chance of that air bag causing the next injury or death? What will this negligence cost you and your business? Your primary objective as a corporate entity is to eliminate risk.

Financial – You will need several measurements for this example.

Average Ticket – Set of air bags removed from a vehicle in the buyback program = $115 (L $55, R $60).

What is the average return on a catalytic converter today? 6 months ago? 6 months from now?

What is the average return on an aluminum wheel?

What is the average return on the average 25 pounds of wire pulled from a vehicle?

Process – Are you a full-service dismantler, parts on demand (pull as you go) or a self-service operation?

Full-Service – Your dismantle report should have three categories: Parts for Warehouse, Parts for Cores and Parts for Recall.

Parts on Demand (pull as you go) - Take bulk list and create individual work orders per car for each set. Don’t try to eat the elephant in one bite by creating a massive list!! The big list tends to get kicked down the road and not get done.

Self-Service - Identify recalls on vehicles at check-in. Remove buyback air bags at check-in or during de-pollution so they are not in the yard.

Terms of Sale

Recalled parts have a one-way ticket to destruction. No warranty, no returns.

The Future – Create processes and procedures now! History has proved that recalls are not going away. Create a system of Identification, Removal, Segregation, and Handling that will protect you and your business.

Here are a couple quick facts about using RAS for your recalled air bags:

All shipping and packing materials are paid for. There is zero out-of-pocket expense.

Participating in the airbag buyback program provides tracking and destruction of these dangerous parts.

Buyback air bag removal is time-effective and profitable. It is also easier than converters or aluminum wheels.

Create monthly cash flow! $55 for drivers and $60 for passenger air bags. Checks are mailed within 28 days of check-in.

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